Leading truck and bus maker Ashok Leyland is expected to commence the construction work for its greenfield factory in Uttar Pradesh (UP) early next fiscal.

The proposed integrated manufacturing unit will come up partially on the site of the now-defunct Scooters India in Lucknow. The site is close to the airport. The Hinduja flagship has proposed to invest ₹1,000 crore over some time.

“We expect to finalise the land area before the end of this fiscal and the construction work will start within a couple of months after that,” Shenu Agarwal, MD & CEO of the ₹36,144-crore Ashok Leyland, told businessline.

The new factory will manufacture both electric as well as ICE (internal combustion engine) vehicles. It will produce electric buses, electric light commercial vehicles, and other vehicles powered by various fuels such as diesel, CNG and hydrogen. The initial capacity of the plant will be 2,500 buses per year.

The investment in the project will be made by Ashok Leyland and the factory will cater to the requirements of both Ashok Leyland and Switch Mobility, the electric vehicle (EV) arm of the company.

“We have seen various States’ policies, incentives, schemes.. We felt UP will become a significant market in the future for EVs as the State has ambitious net-zero targets,” said Agarwal.

While the company has to develop some suppliers for the new factory, there are already a host of suppliers, who have been supplying to Tata Motors, which has been running a factory in Lucknow. Also, some of Ashok Leyland’s suppliers are either based at Pantnagar (Uttarakhand) or Alwar (Rajasthan).

The UP factory is expected to give further fillip to the company’s pan-India growth strategy.

Brand perception

Agarwal pointed out that one of the reasons for choosing UP was to change the brand perception. As it has become a strong pan-India brand, the company is investing everywhere in the country to grow its volumes and share.

“The perception about the Ashok Leyland brand is that it is ‘conservative’. But it is not. The company had embarked on the journey of transitioning from a conservative South-India-centric player to a pan-India company and a global company. It has been happening and maybe we need to accelerate this,” he added.

While the South is still generating quite a lot of sales and revenue, other regions like the North have been growing faster for Ashok Leyland. The company has gained a good share in the northern, central, western, and eastern regions. The company’s M&HCV market share in the South used to be 45-50 per cent and the north had about 15 per cent share. However, its share in the North has seen a sharp increase.

“While we are still maintaining a 45 per cent share in the southern region, our share in the Northern region has grown above 25 per cent and we are very close to hitting 30 per cent,” he said.

The company’s international presence has also grown with its entry into several many markets now. “Of course, the numbers will be lower due to subdued market conditions in the past two years, but penetration is deeper now when compared with the past,” he added.

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